Higher REO Prices May Slow Investor Buying in 2014

Institutional investors that have been scooping up thousands of foreclosed single-family homes over the past two years will be “more “restrained” in 2014, according to a joint report by RealtyTrac and Pintar Investment Co.

The rush to assemble large portfolios of distressed properties and create large rental companies has helped to generate double-digit house price appreciation in most major markets. As a result, the pool of homes that will produce the kind of yields investors expect is drying up.

“Investors will expand their holdings now and into 2014, but this expansion is likely to be decidedly more restrained than the binge of the past 18 months,” the RealtyTrac/Pintar report says.

Going forward, successful investors will likely “acquire homes in secondary markets” and focus on carefully managing their existing portfolios. The joint report is called “Back to Reality with Buy to Rent.”